World Retail Congress: Wal-Mart Director Sees Need for Fast Action

GLYNN DAVIS

BARCELONA, Spain — Partly as a result of the impact of a growing global population on the retail sector, a longtime director of Wal-Mart Stores questions whether the world's largest merchant is adapting fast enough to compete effectively in this new environment.

“The biggest issue for me is that some retailers are changing rapidly but others are not,” said Jack Shewmaker, a director and a former chief financial officer at Wal-Mart, speaking at the World Retail Congress here this month. “If you've got the same model as five years ago, then you should take a look at it, as customers are changing and products are changing. Wal-Mart needs to change, and it is doing so, but I'm not sure if it is changing fast enough.”

He cited the forecasts from the United Nations that the world population will grow from 6.5 billion people to 10 billion by 2025 as posing a serious challenge to retailers, not only in emerging markets but also in established territories. Shewmaker expressed concern that Wal-Mart is failing to rise to the challenge of operating in this changed world in a number of key areas.

He said he thinks the company is underestimating the competition, as he said it had done with the Internet: “This is what [founder] Sam [Walton] would never have done. You need to look at what others do better than you, and I think Wal-Mart could do it better.”

There was also concern that the company is failing to meet customer needs in its core markets as it chases business overseas.

“In the rural U.S., customers are smart and are getting smarter by the day. Wal-Mart is getting caught up in ‘newness’ mode, and we then forget to re-modernize our existing stores,” said Shewmaker. “We should take money from growth and expansion to make sure the existing business is strong.”

He also questioned whether the company should still be predominantly using the same metrics to measure its effectiveness and performance as it has for some time, or whether it should be incorporating some new metrics, such as customer time in the checkout line, the time for a complaint to be answered, the time taken to log on to the website and the time it takes to find a space in the parking lot.

There are also challenges facing the company in the current economic downturn, but Shewmaker said Wal-Mart grew market share more rapidly in previous downturns, and should again invest in growth.

“The market is challenging, and we'll get through it,” he said. “But some people will make bad decisions on how they fund their company. Technology and systems change so fast that people are having trouble keeping up with it,” suggested Shewmaker.